Jet fuel prices declined due to flights that were canceled over the coronavirus-related restrictions. This prompted the Russians to blend it with diesel for cars. But this may lead to shortages of the fuel for planes and lower tax returns, according to commodities experts.
The increase of the surrogate fuel is also a source of headache for the diesel producers. They face the rivalry to their products from the cheaper blend, production of which is fully legal.
Russian air carriers have cut jet fuel consumption by 36%. That is 1.9 million tonnes from January to August due to lockdowns.
At the same time, jet fuel usage for other needs rose 1.5 times, or 500,000 tonnes. This was calculated based on data.
In energy commodities, supplies of the fuel for the airplanes and surrogate producers were in equal proportion. This was based on data for May and June.
Russia typically produces around 12 million tonnes of jet fuel annually. Of these, 20% is flown for exports. The bulk of the domestically-consumed fuel, or 62%, was used by civil aviation last year.
The second-largest consumers of the fuel have been the Surrogate fuel producers: around 12-13% in 2018 and 2019. In fact, this jumped to 22% in January – August 2020.
The Use of Jet Fuel Makes the Fuel Cheap
This energy commodity can be used to produce paint and in the chemical industry.
The blend of around 60-70% of the summer-grade diesel and 30-40% of jet fuel is usually used. According to market sources, it is used for the production of the winter-grade, cold-resistant, diesel.
A seller said, everyone is making the fuel cheap by using jet fuel.
Sources said the bulk of the surrogate fuel does not sell via the retail network of filling stations. It sells by deliveries directly to consumers, such as agricultural producers, builders, timber producers, and others.
A trader said the Rosstandart won’t go to them to check the fuel quality while they are OK with it. The main thing is the discount, the trader said.
When compared to the sales of diesel, the sales of surrogate fuel yield fewer tax revenues
Commodity news reports that the energy ministry has looked into the possibility of capping sales of jet fuel. That is for other usese than for the air carriers at the SPIMEX exchange, according to a letter.
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